Arie Kapteyn

The Poverty Line: Concept and Measurement

In this paper, a new approach to defining the poverty line is proposed in which family heads are asked what they consider a minimal income level for their own family. It was found that the respondents appeared to specify higher amounts, the greater their actual income and family size, and that the relationship was loglinear. For each family size there is an income level at which a respondents stated minimum income is equal to his actual income. This level is taken as a definition of the poverty line. The poverty line thus defined varies with family size.

A Disaggregated Analysis of the Allocation of Time within the Household

In this paper the authors estimate a model of the allocation of time within the household using data that allows them to d istinguish between a large number of time uses. The model is explicitly derived within a utility maximization framework and can be estimated by relatively simpl e two-step estimation procedures. The model providesa natural framework to test implications of the more restrictive models of Reuben Gronau_(1977, 1980) and John Graham and Carole Green_(1984). Copyright 1987 by University of Chicago Press.

Latent variable models in econometrics

Publisher Summary This chapter discusses latent variable models in econometrics. The essential characteristic of a latent variable is revealed by the fact that the system of linear structural equations in which it appears cannot be manipulated so as to express the variable as a function of measured variables only. It discusses that for a linear structural equation system to be called “latent variable model,” there is at least one more independent variable than the number of measured variables. Usage of the term “independent” variable as contrasted with “exogenous” variable, the more common phrase in econometrics, includes measurement errors and the equation residuals themselves. In the functional model, the true values of exogenous variables are fixed variates, and therefore, are best thought of as nuisance parameters that may have to be estimated en route to getting consistent estimates of the primary structural parameters of interest. Finally, restrictions on a models covariance structure, which are commonplace in sociometric and psychometric modeling, also serve to aid identification.

Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands☆☆☆

Abstract The theoretical foundation for this paper has been laid [3]. One of the theory there exposed, is that every individual can evaluate his welafre position with respect to his income level on a bounded scale. A description of this evaluation may be given by the individual welfare function of income. One of the outcomes of the theory is that under fairly general assumptions the individual welfare function will tend to a lognormal distribution function Λ(.; μ, σ). In this paper we estimated the welfare function of this income on the basis of a survey by the Consumer Union in The Netherlands. Besides yielding further evidence on the Belgian results, we handled a much finer social differentation; accordingly, we could measure the preference drift and the influence of the family size on individual welfare for much finer specified social subgroups. Finally, we compared our new results for the Dutch survey with the results of the Belgian survey on which we reported in this journal in 1971.

Evaluation Periods and Asset Prices in a Market Experiment

We test whether the frequency of feedback information about the performance of an investment portfolio and the flexibility with which the investor can change the portfolio influence her risk attitude in markets. In line with the prediction of myopic loss aversion (Benartzi and Thaler (1995)), we find that more information and more flexibility result in less risk taking. Market prices of risky assets are significantly higher if feedback frequency and decision flexibility are reduced. This result supports the findings from individual decision making, and shows that market interactions do not eliminate such behavior or its consequences for prices.

ESTIMATION OF THE ERROR-COMPONENTS MODEL WITH INCOMPLETE PANELS

Abstract The error-components model (ECM) is probably the most frequently used approach to analyze panel data in econometrics. When the panel is incomplete, which is the rule rather than the exception when the data come from large-scale surveys, standard estimation methods cannot be applied. We first discuss estimation in the fixed-effects analogue of the ECM, and then present two estimators (quadratic unbiased and maximum likelihood) for the ECM. Some simulation results are given to assess finite-sample properties and computational burden of the various methods.

Some Methodological Issues in the Implementation of Subjective Poverty Definitions

This paper discusses an investigation of the effects of systematic underreporting of income and of sample selectivity on the estimated levels of two subjective definitions of poverty: the so-called subjective poverty line and the Leyden poverty line. Both turn out to have substantially biasing effects. We present methods to remedy the biases. The resulting adjusted poverty lines prove to be quite accurate. Furthermore, we make suggestions for the design of questionnaires that are used in the surveys on which these poverty definitions are based.(This abstract was borrowed from another version of this item.)

Selection Bias in Web Surveys and the Use of Propensity Scores

Web surveys are a popular survey mode, but the subpopulation with Internet access may not represent the population of interest. The authors investigate whether adjusting using weights or matching on a small set of variables makes the distributions of target variables representative of the population. This application has a rich sampling design; the Internet sample is part of an existing probability sample, the Health and Retirement Study, that is representative of the U.S. population aged 50 and older. For the dichotomous variables investigated, the adjustment helps. On average, the sample means in the Internet access sample differ by 6.5 percent before and 3.7 percent after adjustment. Still, a large number of adjusted estimates remain significantly different from their target estimates based on the complete sample. This casts doubt on the common procedure to use only a few variables to correct for the selectivity of convenience samples.

Labour Supply, Income Taxes And Hours Restrictions In The Netherlands

In this paper, two models of individual labor supply are discussed. The first one is the by now classical Hausman-type model with convex piecewise linear budget constraints, in which both random preferences and optimization errors are incorporated by means of normally distributed random variables. Estimated coefficients are plausible but the model has the shortcoming that unemployment for males is not captured and that the simulated hours distribution misses the spikes in the sample distribution of working hours. Therefore, an alternative model is introduced which explicitly takes into account demand side restrictions on working hours. The difference with the standard model is the replacement of the optimization error by the assumption that each individual can choose from a finite set of wage hours packages and either picks the job offer yielding highest utility or decides not to work. It turns out that this model captures the sample distribution of working hours very well, for males as well as females. Wage and income elasticities according to the two models are similar and in line with other recent findings in The Netherlands. Dead weight loss calculations for the second model which explicitly take the hours restrictions into account, imply that the dead weight loss is much smaller than as calculated with the standard model.(This abstract was borrowed from another version of this item.)

Habit Formation, Interdependent References and Demographic Effects in the Almost Ideal Demand System

The authors model (myopic) habit formation, interdependence of preferences among consumers, and demographic effects as taste shifters in a micro consumer demand model of the almost ideal demand variety. The model is estimated for Dutch micro data. The authors investigate the dynamic properties of the model and find that it behaves very differently from models without interdependence of preferences. The implications for micro-macro modeling are discussed. Copyright 1991 by Royal Economic Society.